Tag Archives: Ajay Agrawal

If excitement was a necessary and sufficient criteria to reach higher quantum levels, they certainly must have been achieved yesterday morning in room 374 of the Rotman School of Business here in Toronto (aka “the center of the universe” as our modest town is known to Canadians outside the GTA).

In Canadian start-up circles, the Creative Destruction Lab (CDL) is a household name by now, and ever since the program went global, its recognition has reached far past the borders of Canada.

For a casual observer, the CDL may look like just another effort to bring venture capital and start-ups together, with some MBA students thrown in for that entrepreneurial spirit. I.e. it may appear as just another glorified pitch competition. But nothing could be further from the truth, as this program has essentially been built around an academic hypothesis of why there is so little start-up activity outside Silicon Valley, and why it has been so difficult to replicate this kind of ecosystem. It certainly is not for lack of scientific talent, capital, or trying.

Ajay Agrawal, the founder of the Creative Destruction Lab, beautifully laid out the core hypothesis around which he structured the CDL. He suspects a crucial market mismatch, in that start-up founders are under-supplied with one crucial resource: Sound entrepreneurial judgment. And the latter can make all the difference. He illustrated this with a somewhat comical email from the nineties, written by a Stanford Ph.D. student pitching a project to an Internet provider, arguing that the technology that his small team would build could be extremely profitable, and indicating that they’d love to build this on a fixed salary basis. A hand written note was scribbled on the email print-out from a Stanford business advisor, who suggested realizing this project as their own start-up venture. This company, of course, went on to become Google.

Two pretty things that are not like the other at all, but the mania is very much the same.

Ajay’s thinking throws some serious shade on the current ICO craze which, like most start-ups, I’ve been following very closely. Blockchain technology has some truly disruptive potential way beyond crypto-currency, and I see many synergies between this trustless distributed computing environment, and how Quantum information will interface with the classical world.

From a start-up’s standpoint, an ICO looks extremely attractive, but like all crowdfunding efforts it still requires a good campaign. However, it all hinges on a whitepaper and technology rather than a business plan, and the former typically comes pretty naturally to technical founders. There are also very few strings attached:

The (crypto-)money that comes in is essentially anonymous.

Fund raising occurs on a global basis,

The process is still essentially unregulated in most jurisdictions.

But if the CDL got it right, ICOs are missing the most critical aspect to making a venture successful: Sound entrepreneurial advice.

There is little doubt in my mind that we are currently experiencing something akin to tulip mania in the crypto-currency and ICO arena, but the market for tulips did not vanish after the 1637 mania ran its course, and neither will ICOs. For my part, I expect we will see something of a hybrid model emerge: VC seed rounds augmented by ICOs.

From an entrepreneur’s stand-point, this would be the best of both worlds.